Switch to using federal death list leads New York-based life insurance companies to pay out $52 million

ALBANY, N.Y. (AP) — New York-based life insurance companies have paid out more than $52 million so far in benefits nationwide after regulators urged the firms to make greater use of a regularly updated list of confirmed deaths compiled by the Social Security Administration, said state Financial Services Superintendent Benjamin Lawsky.

Lawsky said Monday that most companies already had the “Death Master File,” but they used the database only as a way to determine when the companies could stop paying annuities to policy holders. The new practice should result in faster payouts of death benefits to families and other beneficiaries with less effort by grieving relatives.

Companies made their first report since the change on Oct. 31. It listed 8,000 payouts, including one company that paid a benefit on a death from 1970. The largest individual payment so far was $673,000.

The companies can hold and invest the assets and revenue of a policy until a death is reported and confirmed, usually through the deceased’s family. The state report shows many policies hadn’t been paid years after deaths.

There was no immediate comment from the Life Insurance Council of New York, a trade association familiar with the practices.

Of the $52.6 million paid so far nationwide, $16.9 million was on New Yorkers’ life insurance policies. “That is just the beginning,” Lawsky said. “Our findings clearly show that matching life insurance policies against a comprehensive list of recent deaths is essential to ensure that all beneficiaries receive the benefits they are owed.”

Another 28,000 matches are now being processed, which would result in millions more in paid death benefits. There are also 950,000 possible matches being checked.

Some insurance companies, such as Massachusetts Mutual Life Insurance Co. and Prudential Insurance Company of America, have long used the lists to determine when they should pay on policies. Metropolitan Life Insurance Co. is among the companies that recently started using the lists for payouts, before Lawsky urged the industry to do so. Those companies proactively paid out $299 million before Lawsky’s letter to New York-based firms.

Under Lawsky’s guidelines, insurance companies will report monthly when they match a policy to a name on the federal death list. They will continue to do this for six months in an effort to whittle down a backlog of unpaid benefits years after deaths.